MOD to Eganise prime contracting route

Department under pressure to include partnering, quality-based selection and team alliancing in contracts.

The MInistry of Defence is to revise its prime contracting procurement route to bring it in line with Egan principles.

The ministry’s property arm, Defence Estates, has come under pressure to make changes from the Government Construction Client Panel, a cross-departmental group that shapes procurement strategy.

It has asked Defence Estates to emphasise partnering and project team alliancing in its prime contracts, which the MOD piloted at the end of the 1990s. The panel is to consider proposed amendments to government procurement policy as part of its strategy document to be launched this autumn.

Prime contracting is one of the government’s preferred procurement routes, alongside the private finance initiative and design and construct. However, a source close to the government said civil servants and contractors were unhappy with it because it loads too much risk on the prime contractor and because of the onerous nature of the contract.

He said: “There is a move to make procurement methods with partnering and quality-based selection at their heart the number one system after PFI, and for prime contracting to drop to number two.”

Another source confirmed that Defence Estates’ version of prime contracting is to be revised to reduce the risk to the contractor.

He said that, because prime contracts have been slow to go out to tender, Defence Estates has an opportunity to review the conditions. “There are not many contracts coming out and I think it [prime contracting] will be materially revisited,” he said.

Another source said the system clashes with the Egan partnering ethos. “Defence Estates won’t kill off prime contracting. But there will be a diplomatic rewriting to redefine it more on Egan lines,” he said.

Defence Estates quality director Clive Cain said the system was under constant review, but he would not be drawn on any planned changes.

He said: “As we use it more, it will become clearer what changes have to be made.”

Sir John Egan declined to discuss the system, but said there was no reason why prime contracting could not work, as long as there was heavy involvement from the client. “BAA tried prime contracting on five projects and it didn’t work because we abrogated responsibility,” he said.

In May, the National Audit Office raised concerns that prime contracting would lead to more fraud in the supply chain.